Competitive Exams: Economics MCQs (Practice-Test 108 of 122)

if the supply of money exceeds the demand for money by 5% then by how much does the rate of interest have to fall to restore market equilibrium, assuming interest elasticity of the demand for money to be-0.50% and other things remaining unchanged?

2.5%

5%

10%

15%

As regards changes in interest rates, the most sensitive money-market is the

Bill market

Un-organised money-market

Call money market

Collateral loan market

the Unit Banking system is very popular in

England

Japan

India

United States of America

The norm of ‘Capital adequacy’ adopted by the international banking institutions is

2% of their aggregate deposit liabilities

4% of their aggregate deposit liabilities

10% of their aggregate deposit liabilities

16% of their aggregate deposit liabilities

In a multi-bank system, with 20% cash reserve ration, on a receipt of cash deposits of Rs. 100 crores, the banking system as a whole can create deposits to the extent of

Rs. 80 crores

Rs. 100 crores

Rs. 320 crores

Rs. 400 crores

The theory of open market operations assumes that

the velocities of both deposits and legal tender money have no relationship

the legal tender money has a higher velocity than bank deposits

the bank deposits have a higher velocity than legal tender money.

the circulation of bank deposits and legal tender money has constant velocity

Consider the following statements:

maintenance of a fixed reserve ratio by the commercial banks.

maintenance of little or no excess reserves by the commercial banks.

presence of a developed money market

Of above statements

2 and 3 are correct

1 and 2 are correct

3 alone is correct

1 and 3 are correct

Which of the following foreign exchange functions are performed by commercial banks?

Transfer purchasing power through telegraphic transfers.

Provide credit for foreign trade.

Furnish facilities for hedging foreign exchange risks.

Select the correct answer using the codes given below:

Codes:

1, 2 and 3

1 and 2

2 and 3

1 and 3

The scope of international trade and division of labour is limited by:

availability of technology

size of the international market

availability of capital

surplus production for exports

The tariff which maximizes a country's economic welfare is called

protective tariff

discriminatory tariff

non-discriminatory tariff

optimum tariff

match List with List II and select the correct answer using the codes given below the list:

List-I (Assumption)

List-II (Implication)

No transport costs in trade

Perfect competition in factor markets

Factor intensities differ between goods

Production functions same in both countries

Commodity prices same in the two countries

Optimal allocation of factors

Techniques of production different for the two goods

Techniques of production same in the two countries

Techniques of production different in the two countries.

A

B

C

D

2

1

5

4

3

4

2

5

3

2

4

1

1

2

3

4

Match List I with List II and select the correct answer using the codes given below the lists:

List-I

List-II

Classical theory of comparative cost advantage

Vent for surplus theory

Theory of opportunity cost

Theory of reciprocal demand

David Recardo

G. Haberler

J S Mill

Adam Smith

A

B

C

D

1

4

2

3

1

2

3

4

4

1

2

3

3

1

2

4

Match List I with List II and select the correct answer using the codes given below the lists: